February 8, 2023

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Saudi Arabia Defied Biden’s Threats Ahead Of OPEC+ Production Cut : by Tyler Durden

Saudi Arabia Defied Biden’s Threats Ahead Of OPEC+ Production Cut

We already know that the Biden administration was humiliated on the international scene last week when OPEC+ cut oil output by 2 million barrels (really more like 1 million when netting out reduced Russian capacity) in stark contrast to the position held by the White House and thus driving a stake through the admin’s plan to keep draining the SPR until the midterms thus delivering the lowest possible gas price on November 8 (with zero regard for what happens the next day now that the US emergency oil reserve is one-third smaller), but we didn’t know just how much delight the Saudi crown prince derived from snubbing George Soros’ closest circle.

We now do: according to the WSJ, days before last week’s major oil-production cut by OPEC and its Russia-led allies, Biden admin officials called their counterparts in Saudi Arabia and other big Gulf producers with an urgent appeal — delay the decision for another month, according to people familiar with the talks. The answer, as we already know, “a resounding no.”

But this wasn’t your kindly, ole grandpa Biden politely asking Riyadh for a favor: instead, in US officials unleashed full-blown threat mode and warned Saudi leaders that “a cut would be viewed as a clear choice by Riyadh to side with Russia in the Ukraine war and that the move would weaken already-waning support in Washington for the kingdom.”

Of course, as everyone knows by now, Saudi officials dismissed the requests “which they viewed as a political gambit by the Biden administration to avoid bad news ahead of the U.S. midterm elections” on which control of Congress hangs. High gas prices and inflation have been central issues in the campaign; in fact it is safe to say that with the midterms in the rearview mirror, both Biden’s and Powell’s urgency in “containing” inflation will disappear, and we may well experience the first official pivot just days after November 8.

However, instead of complying with Biden’s threats of lumping Saudi Arabia in the same group of “baddy” nations as Russia and China, the kingdom leaned on its OPEC allies to approve the cut, which is precisely what happened as OPEC+ became the latest global front to opposite the Biden admin.

The White House denounced the move and vowed to fight OPEC’s control of the energy market. Lawmakers from across the political spectrum called on the U.S. to cut off arms sales to Saudi Arabia. And U.S. officials started looking for ways to punish Riyadh. Earlier today, White House national security spokesman John Kirby said that Biden is re-evaluating the U.S. relationship with Saudi Arabia: “I think the president’s been very clear that this is a relationship that we need to continue to re-evaluate, that we need to be willing to revisit. And certainly in light of the OPEC decision, I think that’s where he is”, he told CNN.

According to the WSJ, in one of its first responses to follow,  the Biden administration is weighing whether to withdraw from participation in Saudi Arabia’s flagship Future Investment Initiative investment forum later this month (surely that will teach them the lesson of a lifetime).

Biden’s henchmen said the OPEC+ decision was unhelpful as inflation driven by high energy prices threatens global growth and represents an economic weapon against the West for Russian President Vladimir Putin. It threatens to drive up American gasoline prices ahead of the Nov. 8 midterms. And apparently in Biden’s mind (really Soros’ mind), it’s inconceivable that Saudi Arabia will put its own interest ahead of those of the democratic party.

The one-month delay requested by Washington – which once and for all shows that to Biden the only thing that matters is the price of gas on Nov 7 – would have meant a production cut made in the days before the election, too late to have much effect on consumers’ wallets ahead of the vote.

In response, Adel al Jubeir, Saudi minister of state for foreign affairs, said the kingdom is committed to ensuring oil-market stability and noted that OPEC+ had increased output through much of the year. He said global economic headwinds justified the decision to cut production.

He blamed the Washington reaction on “the emotions that have to do with the upcoming elections,” in an interview that aired on Fox News on Sunday. “The idea that Saudi Arabia would do this to harm the U.S. or to be in any way politically involved is not correct at all.”

Well… maybe a little, especially when considering the aftermath of the fistbumb optics:

Biden’s visit to Saudi Arabia in July was meant to repair relations after the president entered office with a vow to treat the kingdom as a “pariah” over human rights, particularly the 2018 killing of Saudi journalist Jamal Khashoggi at the hands of Saudi agents. Images of the president’s fist bump with Crown Prince Mohammed bin Salman became a polarizing symbol of the trip, especially when contrasted with historical photos of MBS with Putin.

According to people inside the Saudi government, Biden’s July visit did little to change Prince Mohammed’s determination to chart a foreign policy independent of U.S. influence, in a break from almost 80 years of American-Saudi partnership.

If anything, the WSJ sources said, the visit enraged Prince Mohammed, who was upset that Biden went public with his private comments to the Saudi royal over Khashoggi’s death, which prompted Saudi officials to publicly contradict Biden’s characterization of their interaction. Naturally, US officials – as always clueless to diplomatic nuance – said they saw no indications in their talks with Saudi leaders in recent months that Biden’s comments about Mr. Khashoggi had been damaging to ties.

Prince Mohammed, who runs the kingdom day to day for his father, King Salman, has tried to maximize Saudi Arabia’s economic strength. With high energy prices, the kingdom’s economic growth this year is estimated by the IMF at more than 10%—making it one of the best performers globally. According to the WSJ, Prince Mohammed has told advisers that he isn’t willing to sacrifice much for the Biden administration, or anything it appears, citing its critical view of the Saudi war in Yemen, bid to close a nuclear deal with Iran that Riyadh opposes and Biden’s own comments on the prince.

It gets even more humiliating:

In August, the Saudis had planned to push OPEC+ to raise oil production by 500,000 barrels a day in an effort to please Mr. Biden, but Prince Mohammed ordered the increase lowered to a token 100,000 barrels a day after the Biden visit, the people inside the Saudi government said.

And it only went downhill from there:

The U.S. State Department’s energy-security envoy, Amos Hochstein, sent the Saudi energy minister, Prince Abdulaziz bin Salman, an email that suggested he had broken his word promising a larger increase, people familiar with the matter said.

The email angered Prince Abdulaziz and strengthened his resolve to forge an oil policy independent of the U.S., the people said.

Which brings us to today when the US is thinking what, if anything, it will do in response:

The White House has said the OPEC+ decision shows that the group is clearly aligned with Russia now. U.S. officials warned that the Saudi move could imperil more than $100 million in active foreign military sales that Riyadh is seeking from the U.S.

U.S. lawmakers announced plans to reintroduce a bill to immediately suspend arms sales to Saudi Arabia. Any hopes the Saudis had of securing more precision guided missiles from the U.S. have been all but quashed, U.S. officials said.

Some U.S. lawmakers want to pull American troops out of Saudi Arabia. And Senate leaders from both parties are backing a bill that would allow the Justice Department to sue Saudi Arabia and other OPEC nations for illegal price fixing.

In other words, what goes around comes around, as the US is gradually realizing as it also realizes that it has successfully alienated majority of the world’s population.

*OPEC+ IS ALIGNING WITH RUSSIA WITH ANNOUNCEMENT: JEAN-PIERRE

So OPEC+… Russia… China… India… Brazil… Africa… anyone else?

— zerohedge (@zerohedge) October 5, 2022

More in the full WSJ report (link here).

Tyler Durden
Tue, 10/11/2022 – 19:20

​ Saudi Arabia Defied Biden’s Threats Ahead Of OPEC+ Production Cut

We already know that the Biden administration was humiliated on the international scene last week when OPEC+ cut oil output by 2 million barrels (really more like 1 million when netting out reduced Russian capacity) in stark contrast to the position held by the White House and thus driving a stake through the admin’s plan to keep draining the SPR until the midterms thus delivering the lowest possible gas price on November 8 (with zero regard for what happens the next day now that the US emergency oil reserve is one-third smaller), but we didn’t know just how much delight the Saudi crown prince derived from snubbing George Soros’ closest circle.

We now do: according to the WSJ, days before last week’s major oil-production cut by OPEC and its Russia-led allies, Biden admin officials called their counterparts in Saudi Arabia and other big Gulf producers with an urgent appeal — delay the decision for another month, according to people familiar with the talks. The answer, as we already know, “a resounding no.”

But this wasn’t your kindly, ole grandpa Biden politely asking Riyadh for a favor: instead, in US officials unleashed full-blown threat mode and warned Saudi leaders that “a cut would be viewed as a clear choice by Riyadh to side with Russia in the Ukraine war and that the move would weaken already-waning support in Washington for the kingdom.”

Of course, as everyone knows by now, Saudi officials dismissed the requests “which they viewed as a political gambit by the Biden administration to avoid bad news ahead of the U.S. midterm elections” on which control of Congress hangs. High gas prices and inflation have been central issues in the campaign; in fact it is safe to say that with the midterms in the rearview mirror, both Biden’s and Powell’s urgency in “containing” inflation will disappear, and we may well experience the first official pivot just days after November 8.

However, instead of complying with Biden’s threats of lumping Saudi Arabia in the same group of “baddy” nations as Russia and China, the kingdom leaned on its OPEC allies to approve the cut, which is precisely what happened as OPEC+ became the latest global front to opposite the Biden admin.

The White House denounced the move and vowed to fight OPEC’s control of the energy market. Lawmakers from across the political spectrum called on the U.S. to cut off arms sales to Saudi Arabia. And U.S. officials started looking for ways to punish Riyadh. Earlier today, White House national security spokesman John Kirby said that Biden is re-evaluating the U.S. relationship with Saudi Arabia: “I think the president’s been very clear that this is a relationship that we need to continue to re-evaluate, that we need to be willing to revisit. And certainly in light of the OPEC decision, I think that’s where he is”, he told CNN.

According to the WSJ, in one of its first responses to follow,  the Biden administration is weighing whether to withdraw from participation in Saudi Arabia’s flagship Future Investment Initiative investment forum later this month (surely that will teach them the lesson of a lifetime).

Biden’s henchmen said the OPEC+ decision was unhelpful as inflation driven by high energy prices threatens global growth and represents an economic weapon against the West for Russian President Vladimir Putin. It threatens to drive up American gasoline prices ahead of the Nov. 8 midterms. And apparently in Biden’s mind (really Soros’ mind), it’s inconceivable that Saudi Arabia will put its own interest ahead of those of the democratic party.

The one-month delay requested by Washington – which once and for all shows that to Biden the only thing that matters is the price of gas on Nov 7 – would have meant a production cut made in the days before the election, too late to have much effect on consumers’ wallets ahead of the vote.

In response, Adel al Jubeir, Saudi minister of state for foreign affairs, said the kingdom is committed to ensuring oil-market stability and noted that OPEC+ had increased output through much of the year. He said global economic headwinds justified the decision to cut production.

He blamed the Washington reaction on “the emotions that have to do with the upcoming elections,” in an interview that aired on Fox News on Sunday. “The idea that Saudi Arabia would do this to harm the U.S. or to be in any way politically involved is not correct at all.”

Well… maybe a little, especially when considering the aftermath of the fistbumb optics:

Biden’s visit to Saudi Arabia in July was meant to repair relations after the president entered office with a vow to treat the kingdom as a “pariah” over human rights, particularly the 2018 killing of Saudi journalist Jamal Khashoggi at the hands of Saudi agents. Images of the president’s fist bump with Crown Prince Mohammed bin Salman became a polarizing symbol of the trip, especially when contrasted with historical photos of MBS with Putin.

According to people inside the Saudi government, Biden’s July visit did little to change Prince Mohammed’s determination to chart a foreign policy independent of U.S. influence, in a break from almost 80 years of American-Saudi partnership.

If anything, the WSJ sources said, the visit enraged Prince Mohammed, who was upset that Biden went public with his private comments to the Saudi royal over Khashoggi’s death, which prompted Saudi officials to publicly contradict Biden’s characterization of their interaction. Naturally, US officials – as always clueless to diplomatic nuance – said they saw no indications in their talks with Saudi leaders in recent months that Biden’s comments about Mr. Khashoggi had been damaging to ties.

Prince Mohammed, who runs the kingdom day to day for his father, King Salman, has tried to maximize Saudi Arabia’s economic strength. With high energy prices, the kingdom’s economic growth this year is estimated by the IMF at more than 10%—making it one of the best performers globally. According to the WSJ, Prince Mohammed has told advisers that he isn’t willing to sacrifice much for the Biden administration, or anything it appears, citing its critical view of the Saudi war in Yemen, bid to close a nuclear deal with Iran that Riyadh opposes and Biden’s own comments on the prince.

It gets even more humiliating:

In August, the Saudis had planned to push OPEC+ to raise oil production by 500,000 barrels a day in an effort to please Mr. Biden, but Prince Mohammed ordered the increase lowered to a token 100,000 barrels a day after the Biden visit, the people inside the Saudi government said.

And it only went downhill from there:

The U.S. State Department’s energy-security envoy, Amos Hochstein, sent the Saudi energy minister, Prince Abdulaziz bin Salman, an email that suggested he had broken his word promising a larger increase, people familiar with the matter said.

The email angered Prince Abdulaziz and strengthened his resolve to forge an oil policy independent of the U.S., the people said.

Which brings us to today when the US is thinking what, if anything, it will do in response:

The White House has said the OPEC+ decision shows that the group is clearly aligned with Russia now. U.S. officials warned that the Saudi move could imperil more than $100 million in active foreign military sales that Riyadh is seeking from the U.S.

U.S. lawmakers announced plans to reintroduce a bill to immediately suspend arms sales to Saudi Arabia. Any hopes the Saudis had of securing more precision guided missiles from the U.S. have been all but quashed, U.S. officials said.

Some U.S. lawmakers want to pull American troops out of Saudi Arabia. And Senate leaders from both parties are backing a bill that would allow the Justice Department to sue Saudi Arabia and other OPEC nations for illegal price fixing.

In other words, what goes around comes around, as the US is gradually realizing as it also realizes that it has successfully alienated majority of the world’s population.

*OPEC+ IS ALIGNING WITH RUSSIA WITH ANNOUNCEMENT: JEAN-PIERRE
So OPEC+… Russia… China… India… Brazil… Africa… anyone else?
— zerohedge (@zerohedge) October 5, 2022
More in the full WSJ report (link here).

Tyler Durden
Tue, 10/11/2022 – 19:20 

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